What changed in this filing

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Item 1A. Risk Factors

2023-03-09 compared with 2022-03-11 · 106 added, 108 removed, 724 unchanged (23% of the section changed)

Our business, financial condition, and operating results may be affected by a number of factors, whether currently known or unknown, including but not limited to those described below.

Any one or more of such factors could directly or indirectly cause our actual results of operations and financial condition to vary materially from past or anticipated future results of operations and financial condition.

Any one or more of such factors could directly or indirectly cause

our actual results of operations and financial condition to vary materially from past or anticipated future results of operations and financial condition.

Any of these factors, in whole or in part, could materially and adversely affect our business, financial condition, results of operations, and stock price.

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As of December 31, 2022, we had $424.6 million of cash, cash equivalents, and short-term investments.

We expect that our current resources will enable us to fund our operating expenses and capital expenditure requirements into 2024.

We believe that our current cash, cash equivalents and short-term investments, including the Term Loan, will be sufficient to fund our operations, including our clinical development plan described elsewhere in this Annual Report, into the second half of 2025.

We will need to raise additional capital to continue to fund our operations and service our obligations in the future.

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Accordingly, we expect to rely primarily on equity and/or debt financings to fund our continued operations.

Our ability to raise additional funds will depend, in part, on the success of our preclinical studies and clinical trials and other product development activities, regulatory events, our ability to identify and enter into licensing or other strategic arrangements, and other events or conditions that may affect our value or prospects, as well as factors related to financial, economic and market conditions, many of which are beyond our control.

that may affect our value or prospects, as well as factors related to financial, economic and market conditions, many of which are beyond our control.

There can be no assurances that sufficient funds will be available to us when required or on acceptable terms, if at all.

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Any of these events could have a material adverse effect on our business, operating results, and prospects.

Additionally, any capital raising efforts are subject to significant risks and contingencies, as described in more detail under the risk factor titled “Raising additional capital may cause dilution to our stockholders, restrict our operations, or require us to relinquish rights.”

We have historically incurred losses, have a limited operating history on which to assess our business, and anticipate that we will continue to incur significant losses for the foreseeable future.

We are a biotechnology company with a limited operating history.

We are a biopharmaceutical company with a limited operating history.

We have historically incurred net losses.

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As of December 31, 2022, we had an accumulated deficit of $488.2 million and cash, cash equivalents, and short-term investments of $424.6 million.

We expect that our current resources will enable us to fund our operating expenses and capital expenditure requirements into 2024.

We will need to raise substantial additional capital to continue to fund our operations in the future.

The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our clinical development efforts and the long-term effects of the COVID-19 pandemic.

The COVID-19 pandemic has caused and may continue to cause major disruptions to businesses and markets worldwide.

A recession or market correction resulting from the spread of COVID-19 and related government orders and restrictions could materially affect our business and the value of our common stock.

The amount and timing of our future funding requirements will depend on many factors, including the pace, results and costs of our clinical development efforts and macroeconomic conditions affecting our business and industry.

Failure to raise capital as and when needed, on favorable terms or at all, would have a negative impact on our financial condition and our ability to develop our product candidates.

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We have devoted substantially all of our financial resources to identify, acquire, and develop our product candidates, including conducting clinical trials and providing general and administrative support for our operations.

To date, we have financed our operations primarily through the sale of equity securities and convertible promissory notes.

To date, we have financed our operations primarily through the sale of equity securities and convertible promissory notes and the Hercules Loan and Security Agreement.

The amount of our future net losses will depend, in part, on the rate of our future expenditures and our ability to obtain funding through equity or debt financings, strategic collaborations, or grants.

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If we obtain regulatory approval to market a product candidate, our future revenue will depend upon the size of any markets in which our product candidates may receive approval, and our ability to achieve sufficient market acceptance, pricing, coverage, and adequate reimbursement from third-party payors, and adequate market share for our product candidates in those markets.

Even if we obtain adequate market share for our product candidates, because the potential markets in which our product candidates may ultimately receive regulatory approval could be very small, we may never become profitable despite obtaining such market share and acceptance of our products.

We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future and our expenses will increase substantially if and as we:

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If we are unable to raise additional funds through equity or debt financings or other arrangements with third parties when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to third parties to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

To the extent that we raise additional capital through the sale of equity, including pursuant to any sales under the Open Market Sale Agreement SM entered into in November 2021 (the “November 2021 ATM Agreement”) with Jefferies LLC (“Jefferies”), convertible debt, or other securities convertible into equity, the ownership interest of our stockholders will be diluted, and the terms of these new securities may include liquidation or other preferences that adversely affect the rights of our stockholders.

Any additional sales of our common stock under the November 2021 ATM Agreement and the Aspire Common Stock Purchase Agreement will dilute the ownership interest of our stockholders and may cause the price per share of our common stock to decrease.

To the extent that we raise additional capital through the sale of equity, including pursuant to any sales under the Open Market Sale Agreement SM entered into in September 2022 (the “September 2022 ATM Agreement”) with Jefferies LLC (“Jefferies”), convertible debt, or other securities convertible into equity, the ownership interest of our stockholders will be diluted, and the terms of these new securities may include liquidation or other preferences that adversely affect the rights of our stockholders.

In December 2019, the Company entered into a common stock purchase agreement (the “Aspire Stock Purchase Agreement”) with Aspire Capital, LLC (“Aspire Capital”).

Any additional sales of our common stock under the September 2022 ATM Agreement and the Aspire Common Stock Purchase Agreement will dilute the ownership interest of our stockholders and may cause the price per share of our common stock to decrease.

In addition, any exercise of outstanding warrants will dilute the ownership interest of our stockholders and may cause the price per share of our common stock to decrease.

Debt financing, if available, would likely involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, making additional product acquisitions, or declaring dividends.

Debt financing, including under our Hercules Loan and Security Agreement, may include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, making additional product acquisitions, or declaring dividends.

If we raise additional funds through strategic collaborations or licensing arrangements with third parties, we may have to relinquish valuable rights to our product candidates or future revenue streams or grant licenses on terms that are not favorable to us.

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Our operations, and those of our third-party research institution collaborators, contract research organizations (“CROs”), contract manufacturing operations (“CMOs”), and other contractors and consultants, could be subject to acts of war, earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, medical pandemics or epidemics, such as the novel coronavirus, and other natural or man-made disasters or business interruptions, for which we are partly uninsured.

In addition, we rely on our third-party research institution collaborators for conducting research and development of our product candidates, and they may be affected by government

shutdowns or withdrawn funding.

In addition, we rely on our third-party research institution collaborators for conducting research and development of our product candidates, and they may be affected by government shutdowns or withdrawn funding.

The occurrence of any of these business disruptions could seriously harm our operations and financial condition and increase our costs and expenses.

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Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information;

imposition of post-market studies or clinical studies to assess new safety risks;

imposition of post-market studies

or clinical studies to assess new safety risks;

or imposition of distribution restrictions or other restrictions under a REMS program.

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• injunctions or the imposition of civil or criminal penalties.

The ongoing COVID-19 pandemic may materially affect our ability to complete our clinical trials in a timely fashion or at all.

Any inability to successfully complete clinical development and obtain regulatory approval for our product candidates could result in additional costs to us or impair our ability to generate revenue.

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If such safety problems occur or are identified after our product candidates reach the market, the FDA may require that we amend the labeling of the product or recall the product or may even withdraw approval for the product.

We are heavily dependent on the success of our product candidates, which are in the early stages of development, and we cannot give any assurance that we will generate data for any of our product candidates sufficiently supportive to receive regulatory approval in our planned indications, which will be required before they can be commercialized.

We are heavily dependent on the success of our product candidates and we cannot give any assurance that we will generate data for any of our product candidates sufficiently supportive to receive regulatory approval in our planned indications, which will be required before they can be commercialized.

We have invested substantially all of our effort and financial resources to identify, acquire, and develop our portfolio of product candidates.

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There can be no assurance that the data that we may or may not develop for our product candidates in our planned indications will be sufficiently supportive to obtain regulatory approval.

None of our product candidates have advanced through a pivotal clinical trial for our proposed indications, and it may be years before any such clinical trial is initiated and completed, if at all.

We are not permitted to market or promote any of our product candidates before they receive regulatory approval from the FDA or comparable foreign regulatory authorities, and we may never receive such regulatory approval for any of our product candidates.

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Identifying and qualifying patients or subjects to participate in clinical trials of our product candidates is essential to our success.

The timing of our clinical trials depends in part on the rate at which we can recruit patients or subjects to participate in clinical trials of our product candidates, and we may experience delays in our clinical trials if we encounter difficulties in enrollment.

In addition, our enrollment has been and may in the future be delayed due to supply chain delays and difficulties in site activation.

The eligibility criteria of our clinical trials may further limit the available eligible trial participants as we expect to require that patients or subjects have specific characteristics that we can measure or meet the criteria to assure their conditions are appropriate for inclusion in our clinical trials.

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Our ability to enroll patients in our planned clinical trials may be impacted by the COVID-19 pandemic, or any future disease pandemic.

Health concerns may cause patients to be unwilling to participate in clinical trials if they view themselves at particular risk from the virus, or future clinical trial sites in areas particularly impacted by the COVID-19 pandemic or any other future disease pandemic may close entirely.

We cannot guarantee that the COVID-19 pandemic, or any other future disease pandemics, will not impact enrollment in any future clinical trials.

If patients or subjects are unwilling or unable to participate in our clinical trials for any reason, the timeline for conducting trials and obtaining regulatory approval of our product candidates may be delayed.

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In addition, the approval of a biologic product biosimilar to one of our product candidates could have a material adverse impact on our business as it may be significantly less costly to bring to market and may be priced significantly lower than our product candidates.

We are seeking Orphan drug designation for VRDN-001 from the FDA, but we might not receive such designation.

We intend to seek Orphan drug designation for VRDN-001 and may seek Orphan drug designation for future product candidates.

In August 2021, we filed an application for Orphan drug designation for VRDN-001 based on in vitro data.

In response, the FDA has requested that we provide clinical data in support of our application.

There is no guarantee that upon submission of this additional data the FDA will grant us Orphan drug designation.

See “Business—Government Regulation and Product Approvals—Expedited Development and Review Programs.”

We are seeking Orphan drug designation for VRDN-001 from the FDA and may seek Orphan drug designation for future product candidates, but we might not receive such designation.

In September 2022, we filed an amended application for Orphan drug designation for VRDN-001 based on clinical data.

In response, the FDA has indicated that further review of the application is suspended pending receipt of additional information.

There is no guarantee that upon submission of this additional data information the FDA will grant us Orphan drug designation.

See “Business—Government Regulation and Product Approvals—Orphan Drug Designation.”

We may seek Breakthrough Therapy designation for one or more of our product candidates from the FDA, but we might not receive such designation, and even if we do, such designation may not actually lead to a faster development or regulatory review or approval process.

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The FDA may require us to conduct a confirmatory study to verify the predicted clinical benefit.

The FDA could withdraw accelerated approval for multiple reasons, including our failure to conduct any required post-approval study with due diligence, or the inability of such study to confirm

the predicted clinical benefit.

A failure to obtain accelerated approval or any other form of expedited review or approval for a product candidate could result in a longer time period prior to commercializing such product candidate, increase the cost of development of such product candidate, and harm our competitive position in the marketplace.

The FDA could withdraw accelerated approval for multiple reasons, including our failure to conduct any required post-approval study with due diligence, or the inability of such study to confirm the predicted clinical benefit.

A failure to obtain accelerated approval or any other form of expedited review or approval for a

product candidate could result in a longer time period prior to commercializing such product candidate, increase the cost of development of such product candidate, and harm our competitive position in the marketplace.

Even if we obtain regulatory approval for a product candidate, we will remain subject to ongoing regulatory requirements.

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While operating under accelerated approval, we will be subject to certain restrictions that we would not be subject to upon receiving regular approval.

Healthcare legislative reform measures may have a material adverse effect on our business, financial condition, or results of operations.

Healthcare legislative reform measures may have a material adverse effect on our business, financial condition, or results of operations, and current and future legislation may increase the difficulty and cost for us, and any collaborators, to obtain marketing approval of and commercialize our drug candidates and affect the prices we, or they, may obtain.

In the United States, there have been and continues to be a number of legislative initiatives to contain healthcare costs.

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pharmaceutical industry.

More recently, on August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (“IRA”), which, among other provisions, included several measures intended to lower the cost of prescription drugs and related healthcare reforms.

See “Business—Health Reform.”

Heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products has resulted in several recent Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for products.

We expect that additional state and federal healthcare reform measures will be adopted in the future, particularly in light of the new presidential administration, any of which could limit the amounts that federal and state governments will pay for healthcare therapies, which could result in reduced demand for our product candidates or additional pricing pressures.

We cannot be sure whether additional legislation or rulemaking related to the IRA will be issued or enacted, or what impact, if any, such changes will have on the profitability of any of our drug candidates, if approved for commercial use, in the future.

We may be subject, directly or indirectly, to foreign, federal, and state healthcare fraud and abuse laws, false claims laws, and health information privacy and security laws.

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We may publish privacy policies and other documentation regarding our collection, processing, use, and disclosure of personal information and/or other confidential information.

Although we endeavor to comply with our published policies and other documentation, we may at times fail to do so or may be perceived to have failed to do so.

Although we endeavor to comply with our published policies and other

documentation, we may at times fail to do so or may be perceived to have failed to do so.

Moreover, despite our efforts, we may not be successful in achieving compliance if our employees or vendors fail to comply with our published policies and documentation.

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Risks Related to Our Reliance on Third Parties

Our business may be adversely affected by the effects of health epidemics, including the ongoing COVID-19 pandemic, in regions where we or third parties on which we rely have business operations.

We may have future clinical trial sites in countries or regions that have been directly affected by COVID-19 and depend on third-party manufacturing operations for various stages of our supply chain that may be affected by COVID-19 in the future.

In addition, if COVID-19 continues to be a worldwide pandemic, it could materially affect our operations globally.

Our business may be adversely affected by health epidemics, including the ongoing COVID-19 pandemic, in regions where we have significant manufacturing facilities, concentrations of clinical trial sites, or other business operations.

The ultimate impact of the COVID-19 pandemic or any similar health epidemic is highly uncertain and subject to change.

We do not yet know the full extent of potential delays or impacts on our business, our planned clinical trials, healthcare systems, or the global economy as a whole.

However, these effects could have a material impact on our operations, and we will continue to monitor the COVID-19 situation closely.

We have implemented limitations on our operations, including a work-from-home policy, as a result of the COVID-19 outbreak.

In addition, the ongoing COVID-19 pandemic may materially affect our ability to commence clinical trials in a timely fashion or at all.

Although we have not experienced any significant disruption in our supply chain, if COVID-19 continues to spread, third-party manufacturing of our drug product candidates and suppliers of the materials used in the production of our drug product candidates may be impacted by restrictions resulting from the COVID-19 outbreak, which may disrupt our supply chain or limit our ability to manufacture drug product candidates for our clinical trials.

For example, our sole manufacturer is also manufacturing COVID vaccines, which take priority over all non-COVID manufacturing jobs, and have disrupted our manufacturing schedule.

While such disruptions have not resulted in any delays to date, there can be no assurance such disruptions will not continue and result in delays to future planned clinical trials.

We rely on third parties to conduct our clinical trials, manufacture our product candidates, and perform other services.

We rely on third parties to conduct our preclinical development activities and clinical trials, manufacture our product candidates, and perform other services.

If these third parties do not successfully perform and comply with regulatory requirements, we may not be able to successfully complete clinical development, obtain regulatory approval, or commercialize our product candidates and our business could be substantially harmed.

We have relied upon and plan to continue to rely upon third-party CROs to conduct, monitor, and manage clinical programs.

We have relied upon and plan to continue to rely upon third-party CROs to conduct, monitor, and manage preclinical and clinical programs.

We rely on these parties for execution of clinical trials, and we manage and control only some aspects of their activities.

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CROs may also involve higher costs than anticipated, which could negatively affect our financial condition and operations.

Shortages and governmental restrictions resulting from the COVID-19 pandemic may disrupt the ability of or increase the cost for our clinical trial sites and other CROs to procure items that are essential for our research and development activities, including animals that are used for preclinical studies.

For example, there have been shortages of various animals used in research studies, such as several types of monkeys, which are typically sourced from China, due to the COVID-19 pandemic and disruptions to the global supply chain.

In addition, we do not currently have, nor do we currently plan to establish, the capability to manufacture product candidates for use in the conduct of our clinical trials, and we lack the resources and the capability to manufacture any of our product candidates on a clinical or commercial scale without the use of third-party manufacturers.

We plan to rely on third-party manufacturers and their responsibilities will include purchasing from third-party suppliers the materials necessary to produce our product candidates for our clinical trials and regulatory approval.

There are expected to be a limited number of suppliers for the active ingredients and other materials that we expect to use to manufacture our product candidates, and we may not be able to identify alternative suppliers to prevent a possible disruption of the manufacture of our product candidates for our clinical

trials, and, if approved, ultimately for commercial sale.

Although we generally do not expect to begin a clinical trial unless we believe we have a sufficient supply of a product candidate to complete the trial, any significant delay or discontinuity in the supply of a product candidate, or the active ingredient or other material components in the manufacture of the product candidate, could delay completion of our clinical trials and potential timing for regulatory approval of our product candidates, which would harm our business and results of operations.

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• We may experience labor disputes or shortages, including from the effects of health emergencies (such as novel viruses or pandemics) and natural disasters.

• Our third-party manufacturers may be impacted by global conflicts, including any potential conflict involving China and Taiwan, and any resulting trade sanctions.

Each of these risks could delay our clinical trials, as well as the approval, if any, of our product candidates by the FDA, or the commercialization of our product candidates, or could result in higher costs, or could deprive us of potential product revenue.

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The patent applications that we own or in-license may fail to result in issued patents with claims that cover our product candidates in the United States or in other foreign countries.

is no assurance that all potentially relevant prior art relating to our patents and patent applications has been found, which can invalidate a patent or prevent a patent from issuing from a pending patent application.

Even if patents do successfully issue, and even if such patents cover our product candidates, third parties may challenge their validity, enforceability, or scope, which may result in such patents being narrowed, found unenforceable, or invalidated.

There is no assurance that all potentially relevant prior art relating to our patents and patent applications has been found, which can invalidate a patent or prevent a patent from issuing from a pending patent application.

Even if patents do successfully issue, and even if such patents cover our product candidates, third parties may challenge their validity, enforceability, or scope, which may

result in such patents being narrowed, found unenforceable, or invalidated.

Furthermore, even if they are unchallenged, our patents and patent applications may not adequately protect our intellectual property, provide exclusivity for our product candidates, or prevent others from designing around our claims.

Any of these outcomes could impair our ability to prevent competition from third parties, which may have an adverse impact on our business.

We, independently or together with our licensors, have filed patent applications covering various aspects of our product candidates.

We, independently or together with our licensors, have filed patent applications covering various aspects of our product candidates and their methods of use.

We cannot offer any assurances about which, if any, patents will issue, the breadth of any such patent, or whether any issued patents will be found invalid and unenforceable or will be threatened by third parties.

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In the United States, the statutory expiration of a patent is generally 20 years after it is filed.

Additional patent terms may be available through a patent term adjustment process, resulting from the United States Patent and Trademark Office (“USPTO”) delays during prosecution.

Additional patent terms may be available through a patent term adjustment (“PTA”) process, resulting from the United States Patent and Trademark Office (“USPTO”) delays during prosecution.

Although various extensions may be available, the life of a patent, and the protection it affords, is limited.

Even if patents covering our product candidates are obtained, once the patent life has expired for a product candidate, we may be open to competition from generic medications.

Patent term extensions under the Hatch-Waxman Act in the United States and under supplementary protection certificates in Europe may be available to extend the patent or data exclusivity terms of our product candidates.

Patent term extensions (“PTEs”) under the Hatch-Waxman Act in the United States and under supplementary protection certificates in Europe may be available to extend the patent or data exclusivity terms of our product candidates.

We will likely rely on patent term extensions, and we cannot provide any assurances that any such patent term extensions will be obtained and, if so, for how long.

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Obtaining and enforcing patents in the biotechnology industry involve both technological and legal complexity, and is therefore costly, time-consuming, and inherently uncertain.

In addition, the United States in 2011 enacted and is still currently implementing wide-ranging patent reform legislation.

In addition, in 2011 the United States enacted the Leahy-Smith America Invents Act (the “Leahy-Smith Act”) and is still currently implementing wide-ranging patent reform legislation.

Recent rulings from the U.S.

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Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future.

The USPTO has issued subject matter eligibility guidance to patent examiners instructing USPTO examiners on the ramifications of the Supreme Court rulings in Mayo Collaborative Services v.

The USPTO has issued subject matter eligibility guidance instructing USPTO examiners on the ramifications of the Supreme Court rulings in Mayo Collaborative Services v.

Prometheus Laboratories, Inc.

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Myriad Genetics, Inc., and applied the Myriad ruling to natural products and principles including all naturally occurring molecules.

In addition, the USPTO continues to provide updates to its guidance and this is a developing area.

The USPTO guidance may make it impossible for us to pursue similar patent claims in patent applications we may prosecute in the future.

Our patent portfolio contains claims of various types and scope and methods of medical treatment.

The presence of varying claims in our patent portfolio significantly reduces, but may not eliminate, our exposure to potential validity challenges.

patent applications containing a claim not entitled to priority before March 16, 2013, there is a greater level of uncertainty in the patent law.

On September 16, 2011, the Leahy-Smith America Invents Act (the “Leahy-Smith Act”) was signed into law.

In addition, the USPTO continues to provide updates to its guidance continues to be a developing area.

The USPTO guidance may make it impossible for us to obtain similar patent claims in future patent applications.

Currently, our patent portfolio contains claims of various types and scope, including methods of medical treatment.

The presence of varying types of claims in our patent portfolio significantly reduces, but may not eliminate, our exposure to potential validity challenges.

patent applications, which contain claims entitled to priority after March 16, 2013, there is a greater level of uncertainty due to the the Leahy-Smith Act mentioned above.

The Leahy-Smith Act includes a number of significant changes to U.S.

These include provisions that affect the way patent applications will be prosecuted and may also affect patent litigation.

These include provisions that affect the way patent applications will be prosecuted and may also affect patent

The USPTO has promulgated regulations and developed procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first to file provisions, did not come into effect until March 16, 2013.

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Included in these new procedures is a process known as Inter Partes Review (“IPR”), which has been generally used by many third parties since the enactment of the Leahy-Smith Act to invalidate patents.

The IPR process is not limited to patents filed after the Leahy-Smith Act was enacted and would, therefore, be available to a third party seeking to invalidate any of our Licensor’s U.S.

patents, even those filed before March 16, 2013.

Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in U.S.

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If we are unable to maintain effective proprietary rights for our product candidates or any future product candidates, we may not be able to compete effectively in our proposed markets.

In addition to the protection afforded by patents, we rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable or that we elect not to patent, processes for which patents are difficult to enforce and any other elements of our product candidate discovery and development processes that involve proprietary know-how, information, or technology that is not covered by patents.

In addition to the protection afforded by patents, we rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable or that we elect not to patent, such as processes for which patents are difficult to enforce other elements of our product candidate discovery and/or development processes that involve proprietary know-how, information, or technology that is not covered by patents.

However, trade secrets can be difficult to protect.

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We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises and physical and electronic security of our information technology systems.

While we have confidence in these individuals, organizations, and systems, agreements or security measures may be breached, and we may not have adequate remedies for any breach.

While we have confidence in these individuals, organizations, and systems, agreements or security measures may be breached, and we may not have adequate remedies for such a breach.

In addition, our trade secrets may otherwise become known or be independently discovered by competitors.

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and foreign patent offices to challenge the validity of these patents and patent applications.

In addition, or alternatively, we may consider whether to seek to negotiate a license of rights to technology covered by one or more of such patents and patent applications.

If any patents or patent applications cover our product candidates or technologies, we may not be free to manufacture or market our product candidates as planned, absent such a license, which may not be available to us on commercially reasonable terms, or at all.

In addition, or alternatively, we may consider whether to seek to negotiate a license of rights to technology covered by one or more of such third-party patents and patent applications.

patents or patent applications cover our product candidates or technologies, we may not be free to manufacture or market our product candidates as planned, absent such a license, which may not be available to us on commercially reasonable terms, or at all.

It is also possible that we have failed to identify relevant third-party patents or applications.

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These established companies may have a competitive advantage over us due to their size, cash resources, and greater clinical development and commercialization capabilities.

In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us.

In addition, companies that perceive us to be a competitor may be unwilling to assign or license their patent rights to us.

Even if we are able to license or acquire third-party intellectual property rights that are necessary for our product candidates, there can be no assurance that they will be available on favorable terms.

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We employ individuals who were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors.

Although we have written agreements and make every effort to ensure that

our employees, consultants, and independent contractors do not use the proprietary information or intellectual property rights of others in their work for us, we may in the future be subject to any claims that our employees, consultants, or independent contractors have wrongfully used or disclosed confidential information of third parties.

Although we have written agreements and make every effort to ensure that our employees, consultants, and independent contractors do not use the proprietary information or intellectual property rights of others in their work for us, we may in the future be subject to any claims that our employees, consultants, or independent contractors have wrongfully used or disclosed confidential information of third parties.

Litigation may be necessary to defend against these claims.

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Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.

The legal systems of some countries, particularly some developing countries, do not favor the enforcement of patents, trade secrets, and other intellectual property protection, particularly those relating to biotechnology products, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally.

The legal systems of some countries, particularly some developing countries, do not favor the enforcement of patents, trade secrets, and other intellectual property protection, particularly those relating to biotechnology and therapeutic products, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally.

Proceedings to enforce our patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing, and could provoke third parties to assert claims against us.

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Risks Related to Commercialization of Our Product Candidates

If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our product candidates, we may be unable to generate any revenue.

Although some of our employees may have been employed at companies that have launched pharmaceutical products in the past, we have no experience selling and marketing our product candidates and we currently have no marketing or sales organization.

If we are unable to establish commercial manufacturing, sales and marketing capabilities or enter into agreements with third parties to commercially manufacture, market and sell our product candidates, we may be unable to generate any revenue.

Although some of our employees may have been employed at companies that have launched pharmaceutical products in the past, we have no experience establishing commercial manufacturing relationships for or selling and marketing our product candidates and we currently have no commercial manufacturing relationships or marketing or sales organization.

To successfully commercialize any products that may result from our development programs, we will need to find one or more collaborators to commercialize our products or invest in and develop these capabilities, either on our own or with others, which would be expensive, difficult, and time consuming.

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We may not be successful in our efforts to establish such a strategic collaboration for any product candidates and programs on terms that are acceptable to us, or at all.

This may be because our product candidates and programs may be deemed to be at too early of a stage of development for collaborative effort, our research and development pipeline may

be viewed as insufficient, the competitive or intellectual property landscape may be viewed as too intense or risky, and/or third parties may not view our product candidates and programs as having sufficient potential for commercialization, including the likelihood of an adequate safety and efficacy profile.

This may be because our product candidates and programs may be deemed to be at too early of a stage of development for collaborative effort, our research and development pipeline may be viewed as insufficient, the competitive or intellectual property landscape may be viewed as too intense or risky, and/or third parties may not view our product candidates and programs as having sufficient potential for commercialization, including the likelihood of an adequate safety and efficacy profile.

Even if we are able to successfully enter into a collaboration regarding the development or commercialization of our product candidates, we cannot guarantee that such a collaboration will be successful.

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We are aware that the following companies have therapeutics marketed or in development for TED:

Horizon Therapeutics plc and Immunovant, Inc., Novartis International AG, Harbour BioMed and Valenza Bio, Inc.

Horizon Therapeutics plc and Immunovant, Inc., Harbour BioMed, Valenza Bio, Inc.

and Sling Therapeutics, Inc.

If approved, VRDN-001 will also compete against generic medications, such as corticosteroids, that are prescribed for and surgical procedures for the treatment of TED.

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Additional mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated in our competitors.

For example, in December 2022, Amgen Inc.

announced that it intends to acquire Horizon Therapeutics plc, which could have a significant impact on the competitive landscape for therapeutics for TED.

Large pharmaceutical companies in particular have extensive expertise in preclinical and clinical testing and in obtaining regulatory approvals for drugs.

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Even with the approvals from the FDA and comparable foreign regulatory authorities, the commercial success of our products will depend in part on the healthcare providers, patients, and third-party payors accepting our product candidates as medically useful, cost-effective, and safe.

Any product that we bring to the market may not gain market acceptance by physicians,

patients, and third-party payors.

Any product that we bring to the market may not gain market acceptance by physicians, patients, and third-party payors.

The degree of market acceptance of any of our products will depend on a number of factors, including but not limited to:

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Risks Related to Our Business Operations

Our future success depends in part on our ability to retain our chief executive officer and to attract, retain, and motivate other qualified personnel.

We are highly dependent on Dr.

Jonathan Violin, our president and chief executive officer, the loss of whose services may adversely impact the achievement of our objectives.

Violin could leave our employment at any time, as he is classified as an “at-will” employee.

Recruiting and retaining other qualified employees, consultants, and advisors for our business, including scientific and technical personnel, will also be critical to our success.

Our future success depends in part on our ability to attract, retain, and motivate qualified personnel.

Recruiting and retaining other qualified employees, consultants, and advisors for our business, including scientific and technical personnel, are critical to our success.

There is currently a shortage of highly qualified personnel in our industry, which is likely to continue.

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In addition, failure to succeed in development and commercialization of our product candidates may make it more challenging to recruit and retain qualified personnel.

The inability to recruit and retain qualified personnel, or the loss of the services of Dr.

Violin, may impede the progress of our research, development, and commercialization objectives and would negatively impact our ability to succeed in our product development strategy.

The inability to recruit and retain qualified personnel may impede the progress of our research, development, and commercialization objectives and would negatively impact our ability to succeed in our product development strategy.

We will need to expand our organization and we may experience difficulties in managing this growth, which could disrupt our operations.

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Our future financial performance and our ability to commercialize product candidates and compete effectively will depend, in part, on our ability to effectively manage any future growth.

Unstable market and economic conditions, inflation, increases in interest rates, natural disasters, public health crises such as the COVID-19 pandemic, political crises, geopolitical events, such as the crisis in Ukraine, or other macroeconomic conditions, may have serious adverse consequences on our business and financial condition.

The global economy, including credit and financial markets, have experienced extreme volatility and disruptions at various points over the last few decades, including, among other things, diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, supply chain shortages, increases in inflation rates, higher interest rates, and uncertainty about economic stability.

For example, the COVID-19 pandemic resulted in widespread unemployment, economic slowdown and extreme volatility in the capital markets.

The Federal Reserve has raised interest rates multiple times in response to concerns about inflation and it may raise them again.

Higher interest rates, coupled with reduced government spending and volatility in financial markets, may increase economic uncertainty and affect consumer spending.

Similarly, the ongoing military conflict between Russia and Ukraine and the rising tensions between China and Taiwan have created extreme volatility in the global capital markets and may have further global economic consequences, including disruptions of the global supply chain.

Any such volatility and disruptions may adversely affect our business or the third parties on whom we rely.

If the equity and credit markets deteriorate, including as a result of political unrest or war, it may make any necessary debt or equity financing more difficult to complete, more costly, and more dilutive.

Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance and share price and could require us to delay or abandon development or commercialization plans.

In addition, there is a risk that one or more of our service providers, manufacturers or other partners would not survive or be able to meet their commitments to us under such circumstances, which could directly affect our ability to attain our operating goals on schedule and on budget.

We have experienced and may in the future experience disruptions as a result of such macroeconomic conditions, including delays or difficulties in initiating or expanding clinical trials and manufacturing sufficient quantities of materials.

Any one or a combination of these events could have a material and adverse effect on our results of operations and financial condition.

The Hercules Loan and Security Agreement contains certain covenants that could adversely affect our operations and, if an event of default were to occur, we could be forced to repay any outstanding indebtedness sooner than planned and possibly at a time when we do not have sufficient capital to meet this obligation.

Pursuant to the Hercules Loan and Security Agreement, we have pledged substantially all of our assets, other than our intellectual property rights.

Additionally, the Hercules Loan and Security Agreement contains certain affirmative and negative covenants that could prevent us from taking certain actions without the consent of our lenders.

These covenants may limit our flexibility in operating our business and our ability to take actions that might be advantageous to us and our stockholders.

The Hercules Loan and Security Agreement also contains customary affirmative and negative covenants that, among other things, limit our ability, subject to certain exceptions, to incur indebtedness, grant liens, enter into a merger or consolidation, enter into transactions with affiliates, or sell all or a portion of our property, business or assets.

The Hercules Loan and Security Agreement contains customary events of default.

Upon the occurrence and continuation of an event of default, all amounts due under the Hercules Loan and Security Agreement become (in the case of an insolvency or bankruptcy event), or may become (in the case of all other events of default and at the option of Hercules), immediately due and payable.

If an event of default under the Hercules Loan and Security Agreement should occur, we could be required to immediately repay any outstanding indebtedness.

If we are unable to repay such debt, the lenders would be able to foreclose on the secured collateral, including our cash accounts, and take other remedies permitted under the Hercules Loan and Security Agreement.

Even if we are able to repay any indebtedness on an event of default, the repayment of these sums may significantly reduce our working capital and impair our ability to operate as planned.

Failure in our information technology and storage systems or those of third parties upon whom we rely could significantly disrupt the operation of our business and adversely impact our financial condition.

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The successful assertion of one or more large claims against us that exceeds our available insurance coverage or results in changes to our insurance policies (including premium increases or the imposition of large deductible or co-insurance requirements), could have an adverse effect on our business.

In addition, we cannot be sure that any existing insurance coverage and coverage for errors

and omissions will continue to be available on acceptable terms or that our insurers will not deny coverage as to any future claim.

In addition, we cannot be sure that any existing insurance coverage and coverage for errors and omissions will continue to be available on acceptable terms or that our insurers will not deny coverage as to any future claim.

Any failure or perceived failure by us or any collaborators, service providers, or others to comply with our privacy, confidentiality, data security or similar obligations to third parties, or any data security incidents or other security breaches that result in the unauthorized access, acquisition, or disclosure of sensitive information (including, without limitation personally identifiable information), may result in governmental investigations, enforcement actions, regulatory fines, litigation, or public statements against us, could cause third parties to lose trust in us or result in claims against us.

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In addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change, by value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income or taxes may be limited.

Our most recent analysis of possible ownership changes was completed for certain tax periods ending through December 31, 2020.

Our most recent

analysis of possible ownership changes was completed for certain tax periods ending through December 31, 2022.

It is possible that we have in the past undergone and may in the future undergo, additional ownership changes that could result in additional limitations on our NOL and tax credit carryforwards.

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In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove then current management by making it more difficult for stockholders to replace members of the board of directors, which is responsible for appointing the members of management.

In addition, the provisions of our warrants issued in connection with the 2020 Public Offering may delay or prevent a change in control of our company.

Pursuant to such warrants, under certain circumstances each warrant holder has the right to demand that we redeem the warrant for a cash amount equal to the Black-Scholes value of a portion of the warrant upon the occurrence of specified events, including a merger, an asset sale or certain other change of control transactions.

A takeover of us may trigger the requirement that we redeem the warrants, which could make it more costly for a potential acquirer to engage in a business combination transaction with us.

In addition, he Certificate of Designation of our Series A Preferred Stock and the provisions of our warrants issued in 2020 may delay or prevent a change in control of our company.

At any time while at least 30% of the originally issued Series A Preferred Stock remains issued and outstanding, we may not consummate a Fundamental Transaction (as defined in the Certificate of Designation of the Series A Preferred Stock) or any merger or consolidation of the Company with or into another entity or any stock sale to, or other business combination in which the stockholders of the Company immediately before such transaction do not hold at least a majority of the capital stock of the Company immediately after such transaction, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series A Preferred Stock.

As of December 31, 2022, a majority of the then outstanding shares of Series A Preferred Stock was held by entities affiliated with one stockholder.

This provision of the Certificate of Designation may make it more difficult for us to enter into any of the aforementioned transactions.

In addition, pursuant to such warrants, under certain circumstances each warrant holder has the right to demand that we redeem the warrant for a cash amount equal to the Black-Scholes value of a portion of the warrant upon the occurrence of specified events, including a merger, an asset sale or certain other change of control transactions.

A takeover of us may trigger the requirement

that we redeem the warrants, which could make it more costly for a potential acquirer to engage in a business combination transaction with us.

Our Bylaws provide that the Court of Chancery of the State of Delaware is the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or other employees.

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Market prices for securities of early-stage pharmaceutical, biotechnology, and other life sciences companies have historically been particularly volatile.

Some of the factors that may cause the market price of our common stock to fluctuate include:

• our ability to obtain regulatory approvals for our product candidates, and delays or failures to obtain such approvals;

• failure of any of our product candidates, if approved, to achieve commercial success;

• failure to maintain our existing third-party license and supply agreements;

• changes in laws or regulations applicable to our product candidates;

• any inability to obtain adequate supply of our product candidates or the inability to do so at acceptable prices;

• adverse regulatory authority decisions;

• introduction of new products, services, or technologies by our competitors;

In addition to the factors described elsewhere in this “Risk Factors,” some of the factors that may cause the market price of our common stock to fluctuate include:

• failure to meet or exceed financial and development projections we may provide to the public and the investment community;

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• announcements of significant acquisitions, strategic collaborations, joint ventures, or capital commitments by us or our competitors;

• disputes or other developments relating to proprietary rights, including patents, litigation matters, and our ability to obtain patent protection for our technologies;

• additions or departures of key personnel;

• significant lawsuits, including patent or stockholder litigation;

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• changes in the market valuations of similar companies;

• general market or macroeconomic conditions, including the ongoing COVID-19 pandemic;

• sales of our common stock by us or our stockholders in the future;

• trading volume of our common stock;

• announcements by commercial partners or competitors of new commercial products, clinical progress or the lack thereof, significant contracts, commercial relationships, or capital commitments;

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• period-to-period fluctuations in our financial results.

Moreover, the capital markets in general have experienced substantial volatility that has often been unrelated to the operating performance of individual companies, including as a result of the ongoing COVID-19 pandemic.

These broad market fluctuations may also adversely affect the trading price of our common stock.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors